# C_2007269EN.01003101.xml

| 10.11.2007 | EN | Official Journal of the European Union | C 269/31 |
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10.11.2007

EN

Official Journal of the European Union

C 269/31

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Action brought on 27 August 2007 — Commission of the European Communities v Kingdom of Spain

(Case C-397/07)

(2007/C 269/54)

Language of the case: Spanish

Parties

Applicant: Commission of the European Communities (represented by E. Gippini Fournier and M. Afonso, acting as Agents)

Applicant:

Defendant: The Kingdom of Spain

Defendant:

Forms of order sought by the applicant

| — | Declare that:






  — | by subjecting the application of obligatory exemptions from capital duty to certain conditions; |
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Declare that:

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by subjecting the application of obligatory exemptions from capital duty to certain conditions;

| — | by imposing an indirect tax on the transfer of the effective centre of management or the registered office of a company to Spain, for those companies which have not been subject to a similar tax in their country of origin; |
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by imposing an indirect tax on the transfer of the effective centre of management or the registered office of a company to Spain, for those companies which have not been subject to a similar tax in their country of origin;

| — | by subjecting, to an indirect tax, capital used to carry out business transactions through a subsidiary or fixed place of business for companies established in a Member State which does not apply a similar tax similar to the Spanish tax, |
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by subjecting, to an indirect tax, capital used to carry out business transactions through a subsidiary or fixed place of business for companies established in a Member State which does not apply a similar tax similar to the Spanish tax,

The Kingdom of Spain has failed to fulfil its obligations under Directive 69/335/EEC (1), of 17 July 1969.

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| — | Order the Kingdom of Spain to pay the costs. |
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Order the Kingdom of Spain to pay the costs.

Pleas in law and main arguments

| — | Directive 69/335 maintains the status quo regarding the freedom of Member States to re-introduce a capital duty or once again to subject transactions, currently exempt, to that tax. Consequently, Spain cannot abolish its exemptions and tax all transactions to which the special scheme of Royal Decree No 4/2004 is applicable, but which are excluded from the scope of former Article 7(1)(b) and (b)a. Spain must apply the exemption of Article 45(1)(B)10 to all transactions within the scope of the special scheme of Royal Decree No 4/2004, whether in fact that scheme applies or not. |
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Directive 69/335 maintains the status quo regarding the freedom of Member States to re-introduce a capital duty or once again to subject transactions, currently exempt, to that tax. Consequently, Spain cannot abolish its exemptions and tax all transactions to which the special scheme of Royal Decree No 4/2004 is applicable, but which are excluded from the scope of former Article 7(1)(b) and (b)a. Spain must apply the exemption of Article 45(1)(B)10 to all transactions within the scope of the special scheme of Royal Decree No 4/2004, whether in fact that scheme applies or not.

| — | Article 4 of Directive 69/335 lays down an exhaustive list of transactions subject to capital duty. In accordance with Article 4(1)(g) the transfer of the effective centre of management of a company, firm, association or legal person which is considered in the host Member State, for the purposes of charging capital duty, as a capital company, although it is not so considered in the Member State of origin, is subject to capital duty. Consequently Spain cannot tax the transfer of the effective centre of management or the registered office of a capital company which is not subject to a similar tax in its country of origin. The transfer, by a capital company, of its seat to another Member State is not such as to generate capital duty, even where the Member State in which the company was formed did not claim that tax. In addition, nothing in the Spanish legislation indicates that it applies solely in cases of tax evasion or fraud. |
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Article 4 of Directive 69/335 lays down an exhaustive list of transactions subject to capital duty. In accordance with Article 4(1)(g) the transfer of the effective centre of management of a company, firm, association or legal person which is considered in the host Member State, for the purposes of charging capital duty, as a capital company, although it is not so considered in the Member State of origin, is subject to capital duty. Consequently Spain cannot tax the transfer of the effective centre of management or the registered office of a capital company which is not subject to a similar tax in its country of origin. The transfer, by a capital company, of its seat to another Member State is not such as to generate capital duty, even where the Member State in which the company was formed did not claim that tax. In addition, nothing in the Spanish legislation indicates that it applies solely in cases of tax evasion or fraud.

| — | Spain cannot subject to capital duty that part of the capital used to carry out business transactions in Spain through subsidiaries or fixed places of business. As is clear from Article 2(1) of Directive 69/335 Spain cannot subject to capital tax companies whose effective centre of management is situated in another Member State, and not in Spain. Article 2(3) of Directive 69/335 reserves measures, such as that to be applied by Spain, to the specific case of a company whose registered office and effective centre of management is in a third country. As regards the issue of fraud or tax evasion, the Commission emphasises that the Spanish provisions apply without any limitation or distinction according to whether there is tax evasion or fraud. Consequently Spain cannot validly claim such a justification. |
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Spain cannot subject to capital duty that part of the capital used to carry out business transactions in Spain through subsidiaries or fixed places of business. As is clear from Article 2(1) of Directive 69/335 Spain cannot subject to capital tax companies whose effective centre of management is situated in another Member State, and not in Spain. Article 2(3) of Directive 69/335 reserves measures, such as that to be applied by Spain, to the specific case of a company whose registered office and effective centre of management is in a third country. As regards the issue of fraud or tax evasion, the Commission emphasises that the Spanish provisions apply without any limitation or distinction according to whether there is tax evasion or fraud. Consequently Spain cannot validly claim such a justification.

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(1)  Council Directive 69/335/EEC, of 17 July 1969, concerning indirect taxes on the raising of capital OJ, English Special Edition 1969 (II), p. 412.

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